GS Paper 3
Syllabus: Indian economy and related issues
Source: The Indian Express
Context: India’s agricultural exports this year are on track to surpass the $50 billion mark achieved in 2021-22. However, rising imports have reduced the agricultural trade surplus.
Reason for this increase: This is mainly due to an increase in shipments of commodities whose exports have been restricted – wheat, rice and sugar.
Agri-trade trends in India:
Signs of concern:
- Growth in exports is offset by imports: The agricultural trade surplus fell from $7.86 billion to $7.46 billion between April-September 2021 and April-September this year.
- Main agri-commodities imported by India:
- Vegetable oils:
- After petroleum, electronics, gold and coal, vegetable oils are now the country’s fifth largest import item.
- In 2021-22, their imports were valued at $19 billion, which is expected to be increased fiscal year.
- Cotton: India has turned into a net cotton importer primarily due to lower domestic production (in 2021-22, only 307.05 lakh bales (1 bale = 170 kg) are predicted, compared to 353 and 365 lakh bales in the preceding years).
- Spices: Exports have been driven mostly by chilli, cumin, turmeric, ginger, etc. In pepper and cardamom, the country’s imports and exports are equal.
- In pepper, Vietnam, Sri Lanka, Indonesia and Brazil have outcompeted India, while Guatemala has gained market share in cardamom.
- Cashew: In 2021-22, the country’s cashew exports were valued at $453.08 million, compared to imports of $1.26 billion.
- Vegetable oils:
Why is a surplus in agricultural trade matter?
Because, apart from software services, this is one sector in which India has a comparative advantage (at a lower opportunity cost than its trading partners).
Steps taken by the government:
- Raising the minimum support price of mustard
- Granting environmental clearance for commercial cultivation of genetically modified (GM) hybrid mustard (DMH-11).
- The “barnase-barstar” GM technology, which gives higher yields, better disease-resistance or oil quality traits than DMH-11, can be used to develop new mustard hybrids
- Cotton may require a similar approach to enhance domestic output and yields. For example, the GM Bt technology helped nearly treble India’s cotton production to 398 lakh bales in 2013-14.
- It demonstrates the necessity of focusing on domestic output and productivity while not restricting the development of technology that enables these.
Q. Examine how the government’s agriculture policies impact the Indian economy in the short and long term, with a special emphasis on the agricultural sector. (15M)